WorksheetsWISE! Test Practice 2 (39 Questions)
Total questions: 39
Worksheet time: 20mins
Why does a corporation issue bonds to the public?
It wants to borrow money.
It wants to lend money.
It wants to decrease the price of its stock.
It wants to increase the price of its stock.
When a person increases the number of payroll exemptions, he will have
an increase in his net income.
a decrease in his net income.
no change in his net income.
a reduction in his Social Security payment.
Which of the following choices lists assets from MOST liquid to LEAST liquid?
Savings account, certificate of deposit (CD), real estate.
Money market account, bonds, checking account.
Stocks, savings account, money market account.
Bonds, real estate, certificate of deposit (CD).
What is the advantage for a person to have his paycheck directly deposited into his bank account?
Check-cashing stores only cash personal checks, not paychecks.
Paycheck funds are available faster than if the person brought the paycheck to the bank.
Taxes deducted from gross pay are lower if the paycheck is sent directly to the bank.
Paycheck funds will only be spent on budgeted items.
What might cause the price of a stock to change on a particular day?
The corporation's finance committee changes the stock price quarterly.
The company announces that it will release a new product.
The president of the company declares an increase or decrease in the price of the stock.
Nothing: prices are fixed at the time the stock is issued for sale to the public.
If raising the deductible on car insurance coverage for collision from $200 to $400, the premium will be
a lower amount.
the same amount
a different amount each month.
billed monthly instead of annually
Why are mutual funds considered a wise investment?
They pay a fixed rate of interest over a set period of time.
They are insured by the federal government.
They diversify a person's portfolio among a number of stocks.
They require a high rate of return.
If you only had liability car insurance and you were at fault in an accident, what would your insurance cover?
Your car and your medical bills.
The other person's car and medical bills.
Nothing.
Your car only.
If a person pays only the minimum monthly amount on a credit card bill, the person will
be charged interest on the remaining balance.
avoid interest charges completely.
reduce the credit limit.
raise his credit score quickly.
When a person uses a debit card:
The money is loaned by the bank.
The money is immediately deducted from the person's account.
The person is charged interest.
The person builds up a credit history.
Which of the following is a good example of a long-term investment?
Savings account.
Money market account.
Certificate of deposit for six months.
Mutual fund.
The main reason people use credit is to
increase the amount of money in a checking account.
increase their net worth.
buy something and pay for it later.
earn interest.
13. An example of an unearned income is
Salary
Wages
Interest
Commission
When a person is "vested" in a retirement plan, it means that the person
has been fired.
is guaranteed the employer's contribution to the plan.
is not eligible to retire.
will receive Medicare benefits.
Which type of financial institution typically pays the highest rate of interest on savings account balances?
Commercial bank.
Investment bank.
Credit union.
Mortgage company.
If a person's credit card is stolen and the thief charges items, what is the maximum amount the person can be held responsible for?
$0.
$50.
$500.
The full amount charged.
When a person budgets for fixed expenses, they should include
gas
rent
entertainment
Which statement is true about sales tax?
It is usually added to the price of an item purchased.
It is a tax on earned income.
It is deducted from a person's paycheck.
It is paid once a year.
A benefit of using a credit union is that it
is open to the public.
offers lower interest rates on loans.
is available in every city.
is regulated by insurance companies.
What type of account typically has the lowest interest rate?
Certificate of deposit
Checking account
Money market account
Savings account
What does "diversification" in investing help reduce?
Taxes
Earnings
Risk
Liquidity
What is the primary purpose of a W-2 form?
To apply for a job
To report wages and taxes withheld to the IRS
To open a bank account
To register for selective service
Which is the best reason for investing in a Roth IRA over a traditional IRA?
Roth IRAs offer immediate tax deductions
Roth IRAs have lower fees
Roth IRAs allow tax-free withdrawals in retirement
Roth IRAs are sponsored by employers
Why would someone want to refinance a mortgage?
To increase the term of the loan
To raise the monthly payment
To get a lower interest rate
To change lenders
If inflation is higher than the interest rate earned on a savings account, what happens to the purchasing power of money in the account?
It increases
It stays the same
It decreases
It doubles
A person invested in a company’s stock. If the company does well, what happens to the stockholder?
The stockholder is guaranteed a dividend
The stockholder may benefit from an increase in stock value
The stockholder is repaid the purchase amount
The stockholder must reinvest automatically
Which is considered a variable expense?
Mortgage
Car payment
Groceries
Student loan
What is a primary reason to maintain a good credit score?
To receive higher taxes
To get better job offers
To qualify for lower interest rates on loans
To reduce insurance premiums
What does the FDIC insure?
Investments in mutual funds
Life insurance policies
Deposits in member banks up to $250,000
Pension plans
What is the advantage of using a credit card responsibly?
It eliminates the need for a budget
It improves your credit history
It provides unlimited spending power
It increases your income
What is the consequence of making only the minimum payment on a credit card balance?
The balance is paid off faster
Interest charges are minimized
It takes longer to pay off the balance
Your credit score improves immediately
What is a “pay yourself first” strategy?
Paying bills immediately
Depositing money into savings before spending
Paying off credit cards monthly
Paying for entertainment first
What is the benefit of compounding interest?
It reduces taxes
It slows account growth
It helps your money grow faster over time
It guarantees profit
What is the safest investment with the lowest return?
Stocks
Savings account
Mutual funds
Corporate bonds
A credit score is most influenced by what factor?
Length of credit history
Types of credit used
Payment history
New credit inquiries
What is gross income?
Income after taxes
Income before taxes
Bonus pay
Interest earned
Which type of auto insurance coverage pays for damages to your car in an accident you cause?
Liability
Collision
Comprehensive
Uninsured motorist
What does a budget help a person do?
Eliminate debt instantly
Increase income
Plan and control spending
Pay more taxes
What is the main purpose of taxes?
To pay for personal savings
To fund government programs and services
To reward saving behavior
To reduce borrowing
